THE ITO, (EXEMPTION), Indore V. M/s. Colonel's Educatin and Cultural Society, Mhow

ITA 7/IND/2017

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 2302 (ITAT-INDORE)
• Duration Of Justice: 1 year(s) 1 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-02-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2012-2013
• Appeal Filed On: 13-01-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: SHRI S S SOLANKI
• Keywords: Charitable institution; Competent authority; Benefit of exemption
• Section: 143(3); 10

Judgement Text

ITO VS. COLONELS EDUCATION ITA 7/IND/2017 1 IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH, INDORE BEFORE SHRI KUL BHARAT, HONBLE JUDICIAL MEMBER AND SHRI MANISH BORAD, HONBLE ACCOUNTANT MEM BER ITA NO. 07/IND/2017 A.Y. 2012-13 INCOMETAX OFFICER (EXEMPTION) INDORE ::: APPELLANT VS COLONELS EDUCATION AND CULTURAL SOCIETY MHOW ::: RESPONDENT APPELLANT BY SHRI RAJIV JAIN RESPONDENT BY SHRI SHRI S.S. SOLANKI DATE OF HEARING 2 6.2.201 8 DATE OF PRONOUNCEMENT 2 8 .2.201 8 O R D E R PER SHRI MANISH BORAD, AM THIS APPEAL OF THE REVENUE RELATING TO THE ASSES SMENT YEAR 2012-13 IS DIRECTED AGAINST THE ORDER OF THE LEARN ED COMMISSIONER OF INCOME TAX (APPEALS)-II, INDORE DATED 19.12.2016 WHICH IS ARISING OUT OF THE ORDER U/S 143 (3) OF THE ACT DATED 27.3.2015 FRAMED BY THE ITO (EXEMPTION) , INDORE. ITO VS. COLONELS EDUCATION ITA 7/IND/2017 2 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL :- 1. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE, THE LD. CIT(A) ERRED IN DELETING THE ADDITION MADE ON ACCOUNT OF DISALLOWANCE OF VARIOUS EXPENSES CLAI MED BY THE ASSESSEE IN TOTAL OF RS.44,29,178/- WITHOUT GIVING ANY PROPER JUSTIFICATION AND IN IGNORING THE FACT THAT THE ASSESSEE HAS NOT PRODUCED ITS BOOKS OF ACCOUNTS DURING THE COURSE OF ASSESSMENT PROCEEDING S IN SPITE OF SUFFICIENT OPPORTUNITIES WERE PROVIDED BY THE A.O. 2. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A)ERRED IN APPRECIATING THAT QUAN TUM AND MERITS OF CLAIM IS TO BE EXAMINED IN EACH YEAR TO JUSTIFY THAT THE SOCIETY IS ENGAGED SOLELY FOR EDUC ATIONAL PURPOSE NOT FOR THE PURPOSE OF PROFIT. 3 . BRIEFLY STATED, THE FACTS, AS CULLED OUT FROM RECORD, ARE THAT THE ASSESSEE IS AN AOP REGISTERED AS CHARITABLE TRUS T AND ENGAGED IN PROVIDING EDUCATION BY WAY OF RUNNING EDUCATIONAL INSTITUTION. IT WAS GRANTED A CERTIFICATE OF EXEMPTION UNDER SECTION 10(23C)(VI) OF INCOME ACT B Y THE COMPETENT AUTHORITY ON 15-06-2009 FOR THE ASSESSMENTS ITO VS. COLONELS EDUCATION ITA 7/IND/2017 3 YEARS 2009-10, 2010-11 AND 2011-12. THE ASSESSEE APPLIED FOR FRESH CERTIFICATE OF EXEMPTION FOR THE ASS ESSMENT YEAR 2012-13 BUT THE SAME WAS REJECTED BY THE LD. CCIT , INDORE, VIDE ORDER DATED 28.3.2013. THE LEARNED ASSE SSING OFFICER DURING THE COURSE OF ASSESSMENT PROCEEDINGS DID NOT TREAT THE SOCIETY AS A CHARITABLE ORGANISATION AND DENIED BENEFIT OF EXEMPTION FOR NET INCOME OF RS.18,56,244/- CLAIMED BY THE ASSESSEE U/S 11(1)(A) OF THE ACT. THE ASSESSING OFFICER ALSO MADE PROPORTIONATE DISALLOWANCE OF EXPENDITURE OF RS. 44,29,178/- AND ACCORDINGLY ASSESSED THE INCOME AT RS.62,85,420/-. 4. BEING AGGRIEVED, THE ASSESSEE PREFERRED FIRST APPEAL BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS) AND SUCCEEDED. NOW THE REVENUE IS IN APPEAL BEFORE THE TRIBUNAL. 5. BEFORE US, THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE CBDT VIDE CIRCULAR NO. 07/2010 DATE D ITO VS. COLONELS EDUCATION ITA 7/IND/2017 4 27.10.2010 CLARIFIED THAT ANY APPROVAL ISSUED ON OR AFTE R 1.12.2006 UNDER SUB-CLAUSE (VI) OR (VIA) OF SECTION 10(23C) WOULD ALSO BE A ONE-TIME APPROVAL WHICH WOULD BE VALID T ILL IT IS WITHDRAWN. HE FURTHER SUBMITTED THAT SINCE THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ACCEPTED THE CLAIM OF THE ASSESSEE OBSERVING THAT THE O RDER OF THE CCIT HAS BEEN QUASHED BY THE HON'BLE M.P. HIGH COURT VIDE ORDER DATED 28.1.2016 HOLDING THAT THERE I S NO FLAW IN THE ORDER OF THE CHIEF COMMISSIONER OF INCO ME TAX AND AS SUCH THE SAME DESERVES TO BE QUASHED. THE LEARNED COUNSEL FOR THE ASSESSEE HAS PLACED ON RECORD THE FOLL OWING WRITTEN SUBMISSIONS :- 1. THAT, THE ASSESSEE WAS GRANTED A CERTIFICATE OF EXE MPTION UNDER SECTION 10(23C)(VI) OF INCOME ACT BY THE COMPETENT AUTHORITY ON 15-06-2009 FOR THE ASSESSMENTS YEARS 2009-10, 2010- 11 AND 2011- 12. IN THE MEANTIME, THE CBDT VIDE ITS CIRCULAR NO. 07/2010 DATED 27-10-2010 CLARIFIED THAT ANY APPROVAL ISSUED ON OR AFTER 01-12- ITO VS. COLONELS EDUCATION ITA 7/IND/2017 5 2006 UNDER SUB CLAUSE (VI) OR (VIA) OF SECTION 10(2 3C) WOULD ALSO BE A ONE TIME APPROVAL WHICH WOULD BE VALID TILL IT IS WITHDRAWN. 2. THAT, PURSUANT TO THE AFORESAID CIRCULAR OF CBDT WH ICH IS BINDING UPON THE INCOME TAX ACT AUTHORITIES UNDER SECTION 1 19 OF THE INCOME TAX ACT, 1961, THE EXEMPTION CERTIFICATE GRA NTED EARLIER BY COMPETENT AUTHORITY ON 15-06-2009 HAS BECOME ONE TI ME APPROVAL WHICH SHALL REMAIN VALID TILL IT IS WITHDRAWN. THUS IN OTHER WORDS THE CERTIFICATE DATE 15-06-2009 WHICH WAS VALID UP TO ASSESSMENT YEAR 2011-12 HAS BECOME CERTIFICATE VALID FOR LIFE UNTIL IT IS WITHDRAWN. THUS, IT CONTINUED TO BE EFFECTIVE FOR T HE ASSESSMENT YEARS BEYOND 2011-12. 3. THAT, IN VIEW OF ABOVE THE CERTIFICATE CONTINUED TO BE VALID FOR THE ASSESSMENT YEAR 2012-13 AND FOR ONWARDS ASSESSMENT YEARS THE ASSESSEE IS, THEREFORE, ENTITLED TO AVAIL THE EXEMP TION UNDER SECTION 10 (23C) (VI) OF INCOME ACT DURING THE ASSESSMENT Y EAR 2012-13. 4. THAT, DUE TO INADVERTENCE DURING THE VALIDITY OF TH E EXEMPTION CERTIFICATE DATED 15-06-2009, THE ASSESSEE APPLIED FOR A FRESH CERTIFICATE OF EXEMPTION FOR THE ASSESSMENT YEAR 20 12-13. HOWEVER ITO VS. COLONELS EDUCATION ITA 7/IND/2017 6 THE SAME WAS REJECTED BY HONBLE CCIT INDORE ON VA RIOUS GROUNDS. IT IS SUBMITTED THAT AFTER CIRCULAR NO. 07 DATED 27/10/2010, THE ASSESSEE WAS NOT REQUIRED TO APPLY FOR RENEWAL OF THE CERTIFICATE AFTER AY 2011-12 AS THE SAME REMAIN ED VALID. 5. THAT, IT IS SUBMITTED THAT THE ORIGINAL CERTIFICATE DATED 15-06-2009 HAS NEVER BEEN WITHDRAWN EVEN NO SHOW CAUSE FOR WIT HDRAWAL OF THE CERTIFICATE HAS EVER BEEN SERVED UPON, THEREFOR E ANY APPLICATION MADE DUE TO INADVERTENCE SHALL NOT AFFE CT THE VALIDITY OF ORIGINAL CERTIFICATE AS THE SAME HAS NEVER BEEN WITHDRAWN. IT IS ALSO NOT THE CASE OF ASSESSEE THAT THE ORIGINAL CER TIFICATED DATED 15- 06-2009 IS NOT VALID FOR LIFE AND IT IS ALSO NOT TH E CASE THAT THE CERTIFICATE DATED 15-06-2009 HAS BEEN WITHDRAWN BY THE AUTHORITIES. IN VIEW OF THESE FACTS ASSESSEE IS ENT ITLED TO AVAIL THE EXEMPTION PURSUANT TO CERTIFICATE DATED 15-06-2009 INSPITE OF REJECTION OF APPLICATION FOR RENEWAL OR ISSUE OF TH E FRESH CERTIFICATE. 6. THE AO RELYING ON THE ORDER OF HONBLE CCIT INDORE DATED 28.03.2013 DISALLOWED THE DEDUCTION CLAIMED BY THE ASSESSEE IN THE ITO VS. COLONELS EDUCATION ITA 7/IND/2017 7 RETURN AND DETERMINED ASSESSED INCOME AT RS.62,85,4 22/-ASSUMING THAT ASSESSEE IS NOT ENTITLED TO EXEMPTION U/S10(23 C)(VI). 7. THAT AGAINST THE ORDER U/S 10 (23C)(VI) OF THE INCO ME TAX ACT, 1961 DATED 28 TH MARCH, 2013 REJECTING THE APPLICATION, THE ASSESSEE FILED A WRIT PETITION BEFORE HONBLE M.P. HIGH COURT. 8. HONBLE M.P. HIGH COURT VIDE ITS ORDER DATED 11.02. 2016 QUASHED THE ORDER DATED 28.03.2013 AND ALLOWED THE WRIT PET ITION OF THE ASSESSEE. 9. THAT CONSEQUENT TO GIVING EFFECT TO THE ORDER OF HO NBLE M.P. HIGH COURT, THE INCOME RETURNED BY THE ASSESSEE SHALL BE THE ASSESSED INCOME. 10. LEARNED CIT (A) VIDE ORDER DATED 3.10.2016 DELETED THE ADDITION OF RS.62,85,422/- PLACING RELIANCE ON ORDE R OF HONBLE M.P.HIGH COURT. 11. INTERESTINGLY THE SAME AO WHO HAS FILED THE APPEAL BEFORE YOUR HONOUR HAS PASSED THE ORDER U/S 143(3) DATED 29.12. 2016 FOR THE ASST YEAR 2014-15 AND HAS ASSESSED THE TOTAL INCOME AT NIL FIGURE. WHILE PASSING THE ORDER HE HIMSELF HAS RELIED ON T HE APPROVAL U/S ITO VS. COLONELS EDUCATION ITA 7/IND/2017 8 10(23C)(VI) GRANTED ON 03.06.2009 BY HONBLE CHIEF COMMISSIONER. 6. ON THE OTHER HAND, THE LEARNED SENIOR DR RE LIED UPON THE ORDER OF THE ASSESSING OFFICER. 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE FIND THAT THE CBDT VIDE CIRCULAR NO. 07/2010 DATED 27.10.2010 CLARIFIED THAT AN Y APPROVAL ISSUED ON OR AFTER 1.12.2006 UNDER SUB-CLAUSE (VI) OR (VIA) OF SECTION 10(23C) WOULD ALSO BE A ONE-TIME APPROVAL WHICH WOULD BE VALID TILL IT IS WITHDRAWN. TH E ASSESSING OFFICER WHILE DENYING THE CLAIM OF THE ASSE SSEE, HAS RELIED ON THE ORDER OF THE CCIT WHO REJECTED THE APPLICATION FILED BY THE ASSESSEE FOR EXEMPTION U/S 10(23C)(VI) OF THE ACT. THEREAFTER, THE ASSESSEE FIL ED A WRIT PETITION BEFORE THE HON'BLE HIGH COURT OF MADHYA PRAD ESH AGAINST THE SAID ORDER OF CCIT. HON'BLE JURISDICTIONAL HIGH COURT QUASHED THE SAID ORDER OF THE CCIT. WE FURTHER ITO VS. COLONELS EDUCATION ITA 7/IND/2017 9 OBSERVE THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ALLOWED THE CLAIM OF THE ASSESSEE FOLLOWI NG THE JUDGMENT OF THE HON'BLE HIGH COURT OF MADHYA PRAD ESH IN THE ASSESSEES OWN CASE, BY OBSERVING THAT THE APPELLANTS EXEMPTION U/S 10(23C)(VI) ALREADY GRANT ED CONTINUES IN THE LIGHT OF CBDT CIRCULAR NO. 07/2010 DATED 27.10.2010. WE, THEREFORE, RESPECTFULLY FOLLOWING THE ORDER OF THE HON'BLE JURISDICTIONAL HIGH COURT (SUPRA) ARE O F THE VIEW THAT AS THE ASSESSEE CONTINUES TO BE ELIGIBLE FOR EXEMPTION U/S 10(23C)(VI) OF THE ACT VIDE ORDER OF THE COMPETENT AUTHORITY DATED 15.6.2009 AND THE ASSESSING OFFICER FRAMED THE ASSESSMENT MERELY DENYING THE BENE FIT OF EXEMPTION TO THE ASSESSEE AND ITS U/S 11(1)(A) OF THE ACT, WE FIND NO REASON TO INTERFERE IN THE FINDINGS OF TH E LEARNED COMMISSIONER OF INCOME TAX (APPEALS) AND ACCORDINGLY UPHOLD THE SAME. ITO VS. COLONELS EDUCATION ITA 7/IND/2017 10 8. IN THE RESULT, THE APPEAL OF THE REVENUE STANDS DISMISSED. PRONOUNCED IN OPEN COURT ON 28 FEBRUARY, 2018. SD SD (KUL BHARAT) (MANISH BORAD) JUDICIAL MEMBER ACCOUNTANT MEMBER 28 TH FEBRUARY, 2018 DN/- COPY TO APPELLANT/RESPODENT/PR.CIT/CIT(A)/DR/GUAR D FILE